Credit is sometimes a confusing term. You might think of it as something like the amount of credit you have in the bank. This is true, in a sense. But when it comes to business, credit is more about the ability to pay back any money borrowed – and indeed the reliability of previous repayments.
Credit is also a measure of risk. The higher your credit rating, the lower your risk of not being able to pay back any money that has been borrowed.
There are so many credit score companies, but Company Search MadeSimple is a much more integrated one – as our company search packages provide a credit score and rating alongside a lot of other information, which gives you a broader overall picture of the company you are searching for.
But why are credit checks so useful?
The Many Uses Of Credit Checks
Credit checks are basically a form of assurance that a company has the ability to pay or borrow certain amounts. It allows you to know the reliability of a company too – as a credit rating is improved by reliable borrowing and repayment.
Some benefits, broadly speaking, of credit checks include:
- Decisions – Making a bad decision is never pleasant, but making a bad business decision can have dire consequences financially. With a credit check, you can make more informed decisions about which companies you do business with.
- Changes – You can quite easily keep track of changes in a company’s circumstances by using the company tracker service, and knowing about changes in their credit rating can give you up to date information on how business is going for them.
- Fraud – Company credit checks will allow you to establish the legitimacy of the company you are dealing with. Using our company search packages and getting a director report means that you can know exactly who you’re dealing with too.
The benefits of credit checks are uniquely suited to businesses, especially small ones who don’t want to expose themselves to bad debt and rely on a stable cash flow.
How Do Credit Checks Actually Work?
It’s all well and good knowing about the usefulness of credit checks, but how do they work? There is a lot involved in making a credit check – but essentially these are the steps of how it works:
- Search Online – It’s really very simple to do, just enter the name of the company you want to search for and then select it. Company Search MadeSimple allows you to search by company name and number when using the advanced search function.
- Download Your Report – Choose a report and purchase it, it will be downloaded to your account. Remember that you need to choose either the ‘Standard Credit’ or the ‘Fully Comprehensive’ packages from our company report options to get credit Ratings & Limit information.
- Get the Results – When you are logged into your account hover over the drop-down menu of the ‘My Account’ link at the top right of the screen. Scroll down to the ‘My Company Reports’ and select it. Click on the ‘Rating & Limit’ tab to find the information on credit.
Many businesses use credit reports, and different types of businesses use them in different ways. For example, a small company might use them to determine whether a potential new partner is creditworthy and to protect themselves from debt.
Alternatively a bigger or more established company might make the decision to run a credit check to assess the status of their new competitors – as to some degree you can ascertain how successful a company is by how much creditors are willing to lend them, or by taking a look at their full account information.
Credit checks often go hand in hand with other things, other bits of information, that are useful for businesses looking to assess potential business partners or their competition. This might include details on any County Court Judgments (CCJs) or perhaps accounts details.
There are many different people who will use them – but the majority of them are business owners, small business owners to be specific.
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